What is a Tennessee Title Loan?
A Tennessee title loan is a title loan, a variant of a short-term loan wherein the title of an asset is used as collateral, processed in the state of Tennessee. Title lending isn’t regulated at the federal level, but has, as of late, been subject to much state legislation. The rules in place vary widely by state and are in a constant state of flux as citizens’ fears about predatory lending find a democratic voice, thus we will primarily be examining the unique features of title loans in Tennessee in this article. For a more fully examined look at title lending, please visit our title lending parent page here. In brief, title loans are short-term (~one month), small-scale ($1-10k), and have high APRs (~300%).
First off, in Tennessee, all title lenders are required to be registered. All loans by unlicensed lenders are void. Secondly, interest rates in Tennessee for title loans are capped at 26% APR, a highly progressive diminishing of the uncapped national average of 300% APR. Title loans in Tennessee cannot exceed 30 days, but it is legal to renew. Every renewal after the 3rd renewal must be accompanied by a 5% payment on the original sum of the loan by the debtor. Finally, if a loan is in default, the debtor has a 20-day period to raise the funds and pay back the loan before the title is forfeited and the property resold.
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In Tennessee, progressive democratic elements in the constituency have successfully pushed legislation to cap interest rates on title loans at 26% APR, a significant reduction from the common uncapped rate of 300% APR.
Tennessee does not require credit checks as part of a title loan application. Title lending is expedient, perhaps to a fault, requiring only a valid ID and, in some cases, proof of income.
The specific laws regulating Tennessee’s title lending industry are as follows:
§ 45-15-105 – Lenders are required to be licensed.
§ 45-15-111 – Interest rates are capped at 2% monthly (~26% APR).
§ 45-15-113 – Title loans cannot exceed 30 days. Renewals past the 3rd renewal require a 5% payment on the original sum of the loan
§ 45-15-114 – There is a 20-day grace period for debtors who have defaulted to reclaim their titled asset before the asset can be resold.